Correlation Between Tesla and Chevron
Can any of the company-specific risk be diversified away by investing in both Tesla and Chevron at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Tesla and Chevron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Chevron, you can compare the effects of market volatilities on Tesla and Chevron and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Tesla with a short position of Chevron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Chevron.
Diversification Opportunities for Tesla and Chevron
Very poor diversification
The 3 months correlation between Tesla and Chevron is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Chevron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron and Tesla is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Tesla Inc are associated (or correlated) with Chevron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron has no effect on the direction of Tesla i.e., Tesla and Chevron go up and down completely randomly.
Pair Corralation between Tesla and Chevron
Assuming the 90 days horizon Tesla Inc is expected to generate 2.55 times more return on investment than Chevron. However, Tesla is 2.55 times more volatile than Chevron. It trades about 0.05 of its potential returns per unit of risk. Chevron is currently generating about 0.01 per unit of risk. If you would invest 17,130 in Tesla Inc on August 30, 2024 and sell it today you would earn a total of 14,420 from holding Tesla Inc or generate 84.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc vs. Chevron
Performance |
| Timeline |
| Tesla Inc |
| Chevron |
Tesla and Chevron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Chevron
The main advantage of trading using opposite Tesla and Chevron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Chevron can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Chevron will offset losses from the drop in Chevron's long position.| Tesla vs. Bausch Health Companies | Tesla vs. Sabra Health Care | Tesla vs. YOOMA WELLNESS INC | Tesla vs. EHEALTH |
| Chevron vs. CVR Medical Corp | Chevron vs. SOFI TECHNOLOGIES | Chevron vs. ASPEN TECHINC DL | Chevron vs. Fevertree Drinks PLC |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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